Zombie Titles: You Need to Know About These!

Many Americans ended up having their homes foreclosed by lenders after the recent recession. Losing a home is a painful experience for the owners and an expensive one for lenders. That’s why sometimes lenders would send out a foreclosure notice, but don’t actually go through with the foreclosure. Normally, when home owners receive the foreclosure notice, they pack up and move out, thinking that the bank will take their home from them. This is not always the case, as sometimes banks don’t follow through with the foreclosure and the title ends up remaining in the name of the home owner who just abandoned his home, thinking the bank was going to take it as it happens in the foreclosure process.

Lenders are not legally required to foreclose on a property when the home owner defaults, and are also not obligated to notify the home owner that they have decided to dismiss the foreclosure, even after the foreclosure notice has been sent out. Lenders choose to sometimes dismiss foreclosures because of the high cost associated with a foreclosure or if they have a surplus of inventory.

You Own the Home Until It is Sold

Just because you choose to leave a home doesn’t mean that your name won’t be on the title anymore and you won’t be responsible for the home anymore. In this case, even if the lender sends out a foreclosure notice, you will still own the home until it is sold at a foreclosure auction by the bank.

Walking away from your home once you have been notified of the foreclosure is not enough to stop being the legal owner of the home. It is your responsibility to see the foreclosure process through, and make sure that your lender didn’t just dismiss the foreclosure and you left the home while still owning it.

A Zombie Title Can Be a Big Financial Burden

After receiving the foreclosure notice, you may have chosen to abandon the home, and move on. Foreclosure will negatively affect your credit score and ability to buy a new home, so renting will probably be your best option. But, if you haven’t made sure that the foreclosure process is finished, you might end up finding out that you still own a home. This can happen months after you thought that you have lost your home for good.

An unoccupied home can become a target for thieves and fall into disrepair. Besides still being responsible for paying taxes on your property, you will also be held liable by the municipality or local government for repairs and maintenance on the property. You will most likely have to pay penalties and fees for leaving the home to fall into disrepair and ruining the overall atmosphere of the neighborhood, even potentially facing legal action.

How Can You Protect Yourself Against Zombie Titles?

The easiest way to make sure that you don’t end up with a zombie title that can make your life even more difficult than a foreclosure would is to make sure that the foreclosure process is completed. Leaving your home once you receive the foreclosure notice is a bad idea. You can still live in the home until your lender sells it, while having the opportunity of making sure that your lender actually goes through with the foreclosure.

Foreclosure is hard on anyone, and it is followed by having to find a new home and years of working on repairing your credit score. But before you start to rebuild your credit and find a new place to live, you should make sure that your home is actually foreclosed on. Having a zombie title on your hands will only attract more financial losses and headaches. So start researching what the foreclosure process entails and avoid a messier situation than the one that you are in already.